How much is the micro-enterprise tax in 2026?
25% of turnover — and of turnover, not of profit. The micro-enterprise tax rate in 2026 is 25%, and it is a single rate regardless of annual turnover — the old tiered system is gone. And here is what hurts most: the tax is charged on turnover, so expenses cannot be deducted — if your activity carries heavy costs, the micro-enterprise tax can work out more expensive than the general regime, however simple the headline rate sounds. There is a floor: if there is no turnover at all, or the calculated tax comes to less than €50, you still pay €50 for the year. A payer can be a natural person registered with the tax authority as carrying on economic activity who does not intend to register for VAT before the threshold is reached.
📋 The rules
- Rate: 25% of turnover
- A single rate whatever the turnover
- Charged on turnover, not profit
- Expenses cannot be deducted
- Minimum: €50 a year
🔓 Exceptions
- The payer must be registered with the tax authority as carrying on economic activity
- A micro-enterprise taxpayer stays below the VAT registration threshold
- Where expenses are high, the general tax regime may work out cheaper
⚠️ Penalties & fines
The biggest mistake is choosing this regime by its headline rate, without doing the sums. The tax is 25% of turnover — meaning you pay even if you trade at a loss, because expenses cannot be deducted. In practice: where your costs are a small share of income — services, consulting, translation — the regime is usually simple and cheap; where costs are heavy — buying stock, materials, transport — the general regime, in which expenses are deductible, is often cheaper. Second: even with no turnover at all you owe €50 a year — “register and forget” does not work, and the debt quietly accrues. And third: a micro-enterprise taxpayer need not register for VAT until the registration threshold — but once it is reached, the picture changes.
📎 Official sources
- VID · Micro-enterprise tax rate →
- likumi.lv · Micro-enterprise Tax Law →
- Ministry of Finance · Tax changes →
❓ Frequently asked
What is the rate?
The micro-enterprise tax rate in 2026 is 25 percent of turnover. It is a single rate regardless of how large the annual turnover is, and the earlier tiered rate system no longer applies.
Can expenses be deducted?
They cannot. The tax is charged on turnover rather than profit, so expenses do not reduce the calculation. Tax is therefore due even where the year has ended in a loss.
Do I pay if there is no turnover?
You do. Where there is no turnover, or the calculated tax does not exceed 50 euros, the taxpayer pays 50 euros for the year. Registering and forgetting is not an option — the debt quietly accrues.
Who can be a payer?
A natural person registered with the tax authority as carrying on economic activity, who does not intend to become a registered VAT payer before reaching the VAT registration threshold.
When is the regime a bad deal?
Where expenses make up a large share of income — in trading with stock purchases, or work with costly materials. Then the general regime, in which expenses are deductible, frequently works out cheaper.
🔎 Common searches
What people search to land here:
- “micro enterprise tax latvia 2026”
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